Supreme Court Upholds Odisha Entry Tax Act, Dismisses Tata Sponge Iron’s Challenge
Apex Court Refuses to Reopen Constitutional Challenge to Entry Tax
Ruling Reinforces State’s Power to Levy Tax on Goods Entering Local Areas
By Our Legal Reporter
New Delhi: January 30, 2026:
In a significant ruling, the Supreme Court of India has dismissed a petition filed by Tata Sponge Iron Limited challenging the constitutional validity of the Odisha Entry Tax Act, 1999. The Act imposes a levy on goods brought into local areas of Odisha from outside the state for consumption, use, or sale.
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A bench comprising Justice Aravind Kumar and Justice Prasanna B. Varale observed that the constitutional validity of the Act had already been upheld in earlier judgments, and there was no reason to reopen the matter. The Court also rejected Tata Sponge Iron’s plea for a refund of entry tax paid to the state.
Case Background
- The Law: Odisha Entry Tax Act, 1999, levies tax on goods entering local areas for consumption, use, or sale.
- Challenge: Tata Sponge Iron approached the Orissa High Court in 2017 questioning the validity of the Act and its rules.
- High Court’s Decision: The Orissa High Court refused to entertain the plea, citing earlier constitutional scrutiny.
- Supreme Court’s Ruling: The apex court upheld the High Court’s order, stating: “We do not find any infirmity in the impugned order.”
Court’s Observations
- Settled Law: The Court emphasized that the constitutional validity of entry tax laws had already been examined in detail in earlier cases.
- No Refund: Tata Sponge Iron’s demand for refund of entry tax was rejected.
- State’s Power: The ruling reinforced the authority of states to levy entry tax under their legislative competence.
Significance of the Judgment
- Legal Certainty: Confirms that entry tax laws, once upheld, cannot be repeatedly challenged.
- Revenue Protection: Ensures that states can continue to collect entry tax without fear of prolonged litigation.
- Corporate Impact: Companies must comply with state tax laws and cannot expect refunds once taxes are paid under valid legislation.
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Broader Implications
This ruling has wider implications for taxation and corporate compliance in India:
- Strengthens State Autonomy: Reinforces states’ fiscal powers under the Constitution.
- Discourages Repetitive Litigation: Prevents corporations from reopening settled constitutional issues.
- Business Compliance: Encourages companies to factor entry tax into their operational costs.
Expert Commentary
Tax experts note that the judgment provides clarity and stability in India’s indirect tax regime. While the Goods and Services Tax (GST) has subsumed many indirect taxes, entry tax disputes continue to surface due to legacy issues.
Conclusion
The Supreme Court’s dismissal of Tata Sponge Iron’s challenge to the Odisha Entry Tax Act marks a reaffirmation of settled constitutional principles. By refusing to reopen the issue, the Court has ensured legal certainty, protected state revenues, and discouraged repetitive litigation.
This ruling underscores the importance of compliance with state tax laws and highlights the judiciary’s role in maintaining stability in India’s fiscal framework.
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